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Does the government’s academy plan add up?

All schools are due to become academies by 2022, yet arguments still rageover their effects on standards, their financial management and whether they provide value for money

On 10 March this year, the chief inspector of schools, Sir Michael Wilshaw, sent a letter to education secretary Nicky Morgan. It expressed, in robust terms, concern that seven multi-academy trusts (MATs), the organisations responsible for running many academy schools, were performing particularly badly. Their chief executives were overpaid, Wilshaw added, and some were hoarding cash reserves, with a total of £111m in the bank between them. In 2014-15, the seven trusts had spent £8.5m on educational consultants.

A few days later, the government announced that every school in England will become an academy by 2022. This was the culmination of a sweeping change to the educational landscape since the Labour government introduced academies in 2000.

Following the model of charter schools in the US, the idea was to give failing schools a boost by allocating them to private sponsors. These new academies were taken out of local authority influence, and allowed to arrange their own admissions, manage staff recruitment, decide what to pay teachers and senior management and opt out of the national curriculum. By the time of the 2010 general election, 203 schools were in MATs.

The Academies Act 2010 expanded the programme by allowing schools to convert to academies without having a sponsor, reporting instead to central government. Initially, priority was given to schools rated as outstanding by Ofsted, and they were offered a financial incentive to convert.

Terry Wrigley, visiting professor at Northumbria University and editor of international journal Improving Schools, says: “For many years, they were treated as brand new schools and given vast amounts of money to enable them to pay for brand new books and computers.”

Today, 59% of secondary schools and 17% of primary schools have academy status. Two thirds are run by MATs. The coalition government also introduced free schools. Based on a Swedish model, these are completely new schools with academy status that can be set up by groups of parents, teachers, charities or private organisations. Just over 300 free schools have now opened, and the plan is to create 500 in the lifetime of this parliament. Academisation, as Wilshaw’s letter suggests, has been a costly process. In 2013, the Public Accounts Committee found that the government had overspent by more than £1bn on the academies programme in two years, and that £95m of this had come from a budget to support underperforming schools.

For the sponsors, it represents a good deal. When they take over a school, they pay a nominal rent to the local authority for a 125-year lease on the land and buildings. In the case of foundation schools (those owned by a trust), the freehold is transferred from the trust to the sponsor.

It’s a potentially lucrative business, says Henry Stewart, cofounder of the Local Schools Network: “You now have people running academy chains, earning over £200k a year. No director of education in the country earns more than £200k a year. So you have people responsible for a couple of dozen schools, paying themselves a fortune.

“Then, although they’re not meant to make a profit, you often have allied service organisations that have a monopoly on the schools in that chain, and are making money from it.”

One example can be seen in a 2014 National Audit Office (NAO) report, which found a number of financial conflicts of interest in the running of Durand Academy: among others, it was paying a business owned by the executive headteacher, Sir Greg Martin, £250k a year to run the school’s leisure facilities. In March, the Perry Beeches chain, which ran five academies, had to close because of financial mismanagement, including third party payments made to the chief executive.

The NAO has also criticised the rising capital costs of free schools, noting in a 2013 report that it had cost the Department for Education on average £6.6m to acquire and convert premises for free schools, more than double the £3m it originally estimated in 2010. It also said that the DfE had spent £240m on free schools in areas that don’t need them.

Not everyone agrees. Jonathan Simons, head of education at think-tank Policy Exchange, argues that £240m is a “tiny proportion of what the department and local authorities spend on capital expenditure”. Nick Timothy, director of the New Schools Network, points out that some free schools have been forced to open in expensive temporary buildings because of obstructive local authorities “using the planning system to frustrate the decision made by the government and the demand by parents for that school”.

Have academies and free schools, as hoped, improved performance? Early research was encouraging, with a 2010 study by the London School of Economics (LSE) showing that in academies that had been open for two years or more, an extra 3% of pupils were achieving five A* to C grades at GCSE, compared with schools that were due to become academies in future.

Much of that advantage seems to have been artificial, however. Wrigley’s research shows that academies were boosting their results by putting students in for vocational qualifications treated as equivalent to four GCSEs, and they were doing this at twice the rate of comprehensive schools (the government stopped including GCSE equivalents in league tables in 2012). The early academies also had “very high levels of exclusion”, says Wrigley, and some persuaded parents to remove pupils before they were excluded.

Research by the Sutton Trust in 2014 and 2015, looking at how disadvantaged pupils fared in academy chains, found that a majority of chains “still underperform the mainstream average on attainment for their disadvantaged pupils”. Some chains, however, did “continue to achieve impressive outcomes for their disadvantaged students against a range of measures”.

Conor Ryan, director of research and communications at the Sutton Trust, says the better performing academies share certain qualities, notably a “very clear mission and sense of purpose”. He adds: “They are quite often geographically focused, so they will have a group of schools that are close enough to each other to be able to share resources. If you’ve got a weak department in a school that you take over, you can deploy some of your better staff from other schools temporarily to help turn that round.”

That geographical closeness is also a feature of local authorities, of course, which have historically shared resources between schools. This, Wrigley notes, is impossible for geographically widespread chains. Similarly, the government’s regional schools commissioners set up to monitor academies lack the comprehensive local knowledge of local authorities, says Stewart: “If you’re covering the whole of the North West, you won’t know that [a particular] school in Rochdale has quite a good intake and should be doing better.”

Research by the National Foundation for Educational Research (NFER) in 2014 found that schools in academy chains performed no better at GCSE than maintained schools. Jack Worth, research manager at NFER, says that the contrast with the LSE’s earlier findings is “striking” but thinks the explanation may be financial – an NAO report showed that, between 2010- 11 and 2013-14, the government reduced its startup funding to schools reopening as sponsored academies by 83%.

Free schools, based on a Swedish initiative, were created in the hope of raising educational performance, particularly in deprived areas. A study by Francis Green, professor of work and education economics at the Institute of Education, found that the majority of free schools have, as expected, been set up in areas of deprivation, although they accepted fewer children on free school meals than other local schools.

According to the New Schools Network, 93% of free schools have been set up in areas where there is a shortage of places, although the NAO, using a different method of calculating demand, puts the figure at 70%. Just over one third (36%) have been set up by MATs, while 19% have been set up by parents and only 8% by teachers. The DfE has been criticised for its unwillingness to share information about why certain applications were approved but not others – a report by the Public Accounts Committee chided: “Greater transparency would strengthen public confidence in the department’s process to approve the very best free school applications.”

Apart from a handful of sixth forms, free schools are yet to put pupils through public examinations. Timothy notes that they are twice as likely to get outstanding Ofsted reports, although figures from 2014 show that they are also more likely to be rated inadequate. The numbers are small in both cases. There have been some notable successes, such as the London Academy of Excellence, a selective sixth form in Newham, where in 2016 eight students received offers of Oxbridge places, but there have also been high profile failures, such as the Discovery New School in Crawley, and the Al Madinah secondary school, both forced to close in 2014.

A Policy Exchange study found that underperforming state schools located near a free school saw improved exam results in the years immediately after the free school opened. It also found that higher performing schools were more likely to see a drop in performance when a free school opened nearby. Green and others have argued that this is most likely to be a case of regression to the mean, although Simons says the evidence from comparable schools shows otherwise.

Simons is a robust supporter of free schools, arguing that there is no need to limit them to areas where there is a shortage of school places, arguing that the competitive boost they provide encourages other schools to raise their game. He adds: “It is perfectly fair for the government to spend money to augment parental choice where they are clearly demonstrating the need for choice. It’s not as if a free school can appear out of nowhere. You can only get approved as a free school if you can demonstrate sufficient volumes of parental demand.”

Central government funding is on a per pupil basis, he adds, and, initial capital costs aside, the advent of a free school simply spreads the costs between schools – those with fewer pupils receive less funding.

It may turn out that academies and free schools inject a new competitive dynamism into the educational landscape but, at the moment, the full-scale academisation of every school in England looks like a huge experiment unsupported by evidence. Local authorities, says Stewart, have become “incredibly efficient” in recent years, adding: “Will it work better that people with very little experience of running schools set them up as opposed to people who have been doing it pretty well for decades? Who knows?”